Monday, September 22, 2014

WHAT ABOUT A FEDERAL TAX AMNESTY?


A new amnesty-like program for delinquent taxes in New Jersey reminded me of a recommendation I made back in 2008.

The Internal Revenue Service often cannot collect outstanding liabilities because taxpayers can't afford to pay them.  Taxpayers cannot afford to pay the balances because of the substantial accrual of penalty and interest.  An initial outstanding tax liability of $5,000 could easily mushroom to $15,000 over a period of years.  The result in many cases is that the IRS ends up writing off most or all of the amount due after the 10-year collection period has passed.

Obviously the IRS cannot permanently remove penalties and interest.  If they did taxpayers would have no motivation to file and pay their taxes on time.

The answer lies in a one-time temporary Federal Tax Amnesty, similar to state tax amnesty programs that have been highly successful in the past (a 2013 Tax Amnesty Program in Connecticut generated between $175 -$180 Million in collections).  Such a program would –

·   generate millions, if not billions, of dollars for the government,

·   allow taxpayers to get rid of the IRS cloud from over their heads,

·   permit the IRS to "close the books" on overdue accounts, and

·   encourage the filing of delinquent returns.

So everyone wins!

Here is how a Federal Tax Amnesty Program would work -

The amnesty would apply to all federal tax liabilities from, say, tax year 2001 through the current year –

* Individual income taxes, the Alternative Minimum Tax, and the various "other taxes", such as self-employment tax, included on the Federal 1040.

* Corporate income taxes and the corporate AMT.

* Payroll Taxes.

The IRS would begin with the original outstanding tax liability only - no accrued interest and penalties would be included - on all previously filed federal tax returns that are not currently part of a criminal prosecution.  From this they would apply all appropriate amounts to date from direct taxpayer payments, “garnishments” of wages, bank accounts, and federal and state tax refunds and rebates, other federal offsets, etc. against the open liability.  None of these payments would be applied against previously assessed penalty and interest; they would all be used to reduce the original “principal”.

Taxpayers would have 3 to 6 months from the date of the initiation of the Amnesty program to pay the net outstanding tax liability, or perhaps to set up an installment payment agreement, without any penalties or interest.

At the same time individuals, corporations and other businesses who have not filed certain income, payroll or other tax returns could do so during the amnesty period and pay only the tax due, with no penalty or interest assessment.  So if you did not file your 2009 (or 2005 for that matter) Form 1040 (or appropriate business or payroll return) at all because you owed $2,000, you could do so now and pay only $2,000.

The IRS would mail to all delinquent taxpayers an itemized “bill” for the outstanding tax due under Amnesty based on their records, so it would be clear just what needed to be paid.  Taxpayers would have the opportunity to dispute the amount of the bill if they felt it is incorrect. 

If an open tax liability is not satisfied in full or a delinquent return is not filed during the Amnesty period, or if the taxpayer defaults on an agreed upon installment payment arrangement permitted under the Amnesty, a higher penalty and/or interest rate would apply to the remaining outstanding balance – a further incentive to pay up during the program.

This would be a one-time only offer.  The legislation creating the Federal Tax Amnesty Program could so state by forbidding any future Amnesty programs.  Or it could state that the federal government would not be able to institute another Amnesty Program during the twenty years after the end of the current amnesty period.

The idiots in Congress have considered a Federal Tax Amnesty Program in the past.  But a Congressional Joint Committee on Taxation report concluded that amnesty would ultimately hinder tax collection and reduce net revenue.  The report suggested individuals would become less likely to pay their taxes in future years because of expectations that government would once again write off interest and penalty fees under another Amnesty.

I don’t agree.  The concerns expressed by the JCOT regarding reduced payment in anticipation of a future amnesty have not proven to be a problem with past state programs.  And this would be advertised as a one-time only offer, as per the text of the legislation.   

IRS collection activity would not cease or slack off once the initial program has completed in anticipation of future amnesties. If anything the Service should be more aggressive in its collection efforts after the amnesty period ends as there would be substantially less “targets”.

Tax Amnesty is aimed less at tax cheats and more at honest Americans who have been so overwhelmed by the accrual of interest and penalties that they walk away from their tax debt altogether.  And it will help to bring taxpayers who have, for one reason or another, not filed past returns back in the system and become current.

So what do you think? 

TTFN

Sunday, September 21, 2014

TRAVELS ON ROUTE 6


I live on US Route 6 (aka the Grand Army of the Republic Highway) in Northeast PA.  And many of the places to which I go for business and personal errands in Pike and Wayne counties are on Route 6.

I learned last year that Route 6 runs the entire length of the State of Pennsylvania, beginning at the New York border in Matamoras and ending at the Ohio border in Meadville.  And while on my recent trip I learned that Route 6 actually runs coast to coast, from Bishop CA to Provincetown MA, and at one time was the longest highway in the US.  It covers about 400 miles in PA and 3,200+ miles cross-country.  

Last year I decided that I would travel the length of Route 6 in PA and visit the various sites along the way.  The route has mile-markers throughout its PA run, beginning at 00 at the Ohio border and ending at 400 at the NY border.  I live just before mile marker 368.  Earlier this year I visited Scranton (near mile marker 332), and last week I visited Wellsboro (near marker 221).  I chose Wellsboro because the Grand Canyon of PA.

I set out on Route 6 West Saturday morning, having just returned from Atlantic City on Friday afternoon.  Unfortunately it rained during the entire trip, stopping just before I arrived at my destination, the Penn Wells Hotel on gas-lit Main Street in downtown Wellsboro (bigger than downtown Hawley but smaller than downtown Honesdale), so I could not partake of the beauty of the scenery on the way out.  Luckily the sky was bright and clear, and traffic was minimal, on my ride home on Tuesday, so I was then able to take in and appreciate the beauty of nature driving through the mountains of northern PA.
 
 
 
Just a few feet off Route 6, on PA Routes 660 and 287, the Penn Wells Hotel, one of Wellsboro’s most historic landmarks originally built in 1869, is truly an “old-fashioned” venue, which is why I chose it.  The current building, restored in the 1920s, has 73 character-filled guest rooms of varying sizes and types.  I had a cozy but comfortable room on the first floor (actually the second - above the lobby).  There is free high-speed wifi in all of the guest rooms. 

Off the lobby are the Mary Wells Room open for lunch and dinner Monday through Saturday and brunch (with live piano music) and dinner on Sunday, and the Penn Wills Lounge.  I was surprised to find that there was a public pay phone in the lobby (a true rarity these days).

Guests receive a complimentary full hot breakfast Monday through Sunday in the dining room, and a discount on the Sunday brunch charge.  I had all my meals (except Saturday night on the train – see below – and lunch Saturday across the street at Café 1905 located inside Dunham’s Department Store) at the hotel - the food and service was impeccable.

Hotel guests are also welcome to use the indoor pool and fitness center, travel market, business center and guest laundry facilities of the more modern 89-room Penn Wells Lodge, two blocks down Main Street and actually on Route 6.

Wellsboro was founded in 1806 as the county seat of Tioga County, and “incorporated” in 1830.  It is named for Mary Wells (no relation, I expect), wife of Benjamin Morris, who purchased the land on which the town was built in 1802.

I did it right this time, and booked my activities in advance online, except for Monday’s which I booked online while at the hotel. 
 
 
 
Saturday night was the dinner ride on the Tioga Central Railroad’s Broadway Limited – an extended excursion through the PA countryside from Wellsboro Junction (3 miles north of downtown Wellsboro on RT 287) past Hammond Lake to Tioga and back.  We left at 6:00 PM and returned about 8:15 PM.  I chose the turkey dinner and strawberry shortcake, which was delicious.  The stuffing was especially good, and the chef gave my table companions, a couple from nearby upstate NY, his special recipe while walking through the dining car after dinner gathering praise.  The cost of the all-inclusive dinner was included in the price, with only beer and wine being extra.

The railroad was built in 1872 to carry coal.  It still maintains regular freight service between Wellsboro and Corning NY.  Tioga Central Railroad offers several excursion options from the end of May through October, with a special Santa Express in November and December.
 
 
 
Sunday’s activity was a matinee performance of A R Gurney’s THE DINING ROOM by Hamilton-Gibson Productions, a community performing arts organization that began in 1991, at the Warehouse Theatre, on Central Avenue just off Main Street two blocks from the hotel.  The show, and cast, was great.   

Prior to the show I read my mystery book sitting in the public square known as “The Green” (where I also found a public pay phone) across the street from the county courthouse,

Monday I had planned to visit Pine Creek Gorge, aka the Grand Canyon of Pennsylvania, which stretches for over 45 miles with depths of nearly 1500 feet.  It is part of the Tioga State Forest.  I originally intended to drive to the gorge and the various scenic vantage points (I am not a hiker), but learned about “Ole Covered Wagon Tours” via a brochure from the display rack in the hotel lobby and booked the 12:30 horse-drawn wagon ride through the canyon.



The 2-hour round trip ride, with an Amish driver (very few others are still trained in “driving” horse-drawn vehicles) began at a family-run farm in Ansonia and took the eight of us along the Pine Creek Rail Trail and back, with colorful commentary on the history of the area and its logging days from our guide.  The guide pointed out that every component of the trip was made in America, except for the public-address system on the wagon, which was made in China.  It was the only thing that did not work properly.
 
I am sorry now that I did not schedule being in the area on a Wednesday, as "Ole Covered Wagon Tours" offers a longer "Wednesday Waterfall Ride" to Little Four Mile Falls.

It was a wonderful, practically perfect, trip, with many of my favorite vacation components – a scenic drive (and rides), an historic old-fashioned hotel, theatre, a train ride, relaxation, and great food and drink.  I look forward to another trip along Route 6 in PA next year.

TTFN

Friday, September 19, 2014

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’


I had a great trip to Wellsboro PA (about 160 miles away on Route 6W) earlier this week.  I will post about it on Anything But Taxes Sunday. 

Today’s BUZZ is rather meaty – to make up for Monday’s abbreviated installment.

* Are there still tax pros out there who have not yet read the September “issue” of THE TAX PROFESSIONAL?  I am waiting to hear your comments on the items discussed in this issue!

* Jason Dinesen asks the question “Will Software Really Replace Accountants?” at DINESEN TAX TIMES.

I agree with Jason’s answer - “there will ALWAYS be a need for tax preparers and accountants”.

Jason correctly points out -

Anyone can prepare their own taxes. Businesses can, too. The software will accept whatever the user puts into it … but it doesn’t mean it’s done correctly.”

And -

“. . . business owners can keep their own books but it doesn’t mean they’re doing it right.”

Remember – garbage in, garbage out.

And more important, when it comes to a business owner doing his/her own bookkeeping using software –

. . . once a business reaches a certain size, keeping the books will become a big drag on the owner. No software solution can overcome the crunch of time.”

I do not, however, share Jason’s concerns for the “tax-preparation business that relied on preparing a high volume of simple tax returns”.

Regardless of how easy it may become to submit a basic tax return, there will always be taxpayers who don’t want to be bothered doing it.  And, of course, those who want to make sure they do not miss anything.

I have always said that if I did nothing but 1040As all day during the tax season, I would make more money, experience less agita, and substantially reduce the number of extensions.

* Joshua D. McCaherty reports on “The Cost of Tax Compliance” at the Tax Foundation’s TAX POLICY BLOG.

According to the IRS, filing taxes will take taxpayers an average of 8 hours and cost $120 for each nonbusiness return.”

The post also points out that the number of pages in the CCH Standard Federal Tax Reporter has more than tripled (almost quadrupled) since I began preparing 1040s in 1972 for 1971 – from less than 20,000 to more than 70,000!

Josh’s obvious bottom line –

A simpler, transparent tax system can greatly reduce the cost of compliance for U.S. taxpayers. A complicated tax system creates not only a huge time and money expenditure for taxpayers, but also for government officials verifying returns, which can lead to higher tax burdens later.”

* Ever wonder “How the Government Became ‘Uncle Sam’”?  Find out at the USA.GOV blog.

* Take a “Quiz: 7 Surprising 2014 Tax Facts” at CNN MONEY.

One interesting fact -

15 states and the District of Columbia impose an estate tax. New Jersey exempts the lowest level of money from estate taxes ($675,000) while Washington imposes the highest estate tax rate (19%). Both New Jersey and Maryland also impose an inheritance tax.

So don’t die in New Jersey.

* Speaking of NJ and death taxes, Ashlea Ebeling tells us about the “Renewed Push To Kill New Jersey Estate Tax” at FORBES.COM.

* This week’s ABOUT BUSINESS LAW / TAXES: US newsletter from Jean Murray focuses on her most asked questions about business travel.

* JK LASSER in a double-play.  First it answers the question “I inherited HH bonds and want to redeem them now. Will I owe any taxes?” (hint - the answer is “it depends” – what else?).

* And “he” lists “7 Deadly Tax Sins” – “actions to always avoid”.  

I would add another action to always avoid – using Henry and Richard or another fast-food tax preparation chain to prepare your tax returns.

* “You Borrowed From Your 401(k) for What?  Matthias Rieker shows the reasons why employees borrow from their plan – and why this is not a good idea – at the Wall Street Journal’s TOTAL RETURN blog.

Borrowing from a 401(k) is better than taking an actual distribution – but it can be treated as one if you do not pay it back in time. 

* It appears the State of NJ is offering what they call an “Easy and Convenient Way to Resolve Unpaid Tax Liabilities”.

The Division of Taxation will send letters to individuals and businesses who have unpaid New Jersey tax liabilities from tax periods 2005 through 2013. The Division is offering interested taxpayers an easy way to resolve those outstanding tax liabilities and reduce or even eliminate their accumulated penalties and fees — if they pay the full amount due by Nov.17, 2014.”

If you do not receive a letter you can visit a Regional Office or call the DOT to discuss reduced payments.

* BARBARA’S BLOG asks “What Does the IRS Have Against Food?”.  The post does a good job of summarizing many of the rules for businesses concerning deducting meals as a tax-free benefit to employees.

* The Tax Foundation addresses the question “How High Are Sales Taxes in Your State?”.

I am a bit confused.  The map shows the NJ sales tax as 6.97% when it is actually 7%, and the PA tax as 6.34% when it is actually 6%.  I am not aware of any local sales tax in PA.

THE FINAL WORD:

I have received many “friend” requests over the past few months from clients, colleagues, actual friends, and readers.  I have not accepted any.

This does not mean I do not want to be your “friend”.  I do not want to be anyone’s “friend”.  Please do not be hurt or offended by my rejection of your request.

I once vowed that I would never join MY FACE or SPACEBOOK or any other such “social media” site (other than TWITTER).  I did not, and still do not, see the need to make my personal life and details available to the great unwashed.  If I want to share updates, stories, and pictures with friends and family I will send them an email.  You will notice that there is absolutely no personal information on my SPACEBOOK page, other than a picture of my cat.

Since I no longer solicit, or accept, any new tax clients I do not need to use SPACEBOOK as a marketing tool.

The one and only reason I joined SPACEBOOK was to be able to participate in a closed “group” consisting of members of the NJ chapter of the National Association of Tax Professionals. 

TTFN

Wednesday, September 17, 2014

WHAT I LEARNED (OR WAS REMINDED) AT THE NATP TAX FORUM


Here are some items of interest or note that were discussed in the educational sessions at last week’s NATP Tax Forum in Atlantic City.

· THE AFFORDABLE CARE ACT – INDIVIDUALS AND BUSINESS

These 2 sessions were the most popular of the Forum.  They were probably attended by every registrant.  Perhaps they should have been offered together in one “general session” on the first day.

If there was ever any question these sessions verified the fact that, while the basic concept of “Obamacare” – attempting universal health insurance coverage without resorting to UK-like “socialized medicine – is sound, the Affordable Care Act (ACA) is without a doubt a complex and convoluted mucking fess.  Like the Earned Income Credit, and the distribution of other government social benefits, the administration and enforcement of ACA does NOT belong in the US Tax Code!  Like the excessive due diligence requirements for claiming the EIC, the ACA causes tax preparers to become Social Workers.

The “individual mandate” for health insurance coverage took effect in 2014.  If you and your family did not have “ACA-compliant” health insurance coverage, via either an employer-provided plan or direct purchase, for all of 2014 you may be subject to a penalty.  This penalty is not easy to calculate and could be expensive.

However many taxpayers who were not properly covered for all of 2014 may be exempt from the penalty under the “individuals who cannot afford coverage“ exemption.  This exemption applies of the cost of “ACA-compliant” health insurance is more than 8% of the modified Adjusted Gross Income of the “household”.

Individuals who acquired insurance via the Obamacare Marketplace and were granted an “advance premium credit” to reduce the monthly out-of-pocket premium payment will be issued new IRS Form 1095-A.  Related IRS Forms 1095-B, issued by insurance providers, and 1095-C, issued by employers, are not required to be sent to taxpayers for 2014.  But the instructor believed that many insurance providers will be issuing Form 1095-Bs for 2014.

And only those who acquired insurance through the Obamacare Marketplace, and receive a 2014 Form 1095-A, will be eligible for a “premium tax credit”.  The amount of the advance credit applied to the premiums, which was based on anticipated 2014 income, will be reconciled to the credit to which the taxpayer is entitled using actual 2014 income on the 2014 Form 1040, and excess advances are paid back, any additional credit is applied to tax liability and can be “refundable”, or one can “break even”.    

The “employer mandate” does not take effect until 2015 or 2016, depending on the total number of employees.

· NEW DEVELOPMENTS – INDIVIDUALS AND BUSINESS

There was a separate session for each.  However, with the exception of the ACA-related items, discussed in more detail in separate sessions (see above), there have been no new developments.   

The 2 “New Development” sessions listed the various temporary tax items that expired on December 31, 2013, and have not yet been extended.  Many items, in both categories, will probably be extended, but not until after the November elections.  So, once again, there will no doubt be delays in the 2015 start date for IRS processing of 2014 income tax returns.

One of the business items that is currently in limbo concerns pre-tax treatment of employer-provided mass transit employee benefits.  There is a good chance this will be extended at year end, and I expect that I will need to once again deal with a few corrected W-2s sent to clients in late spring, resulting in amended returns, as I did a year or so ago.

In the Individuals session we were told that a net Schedule D loss can be used to reduce net investment income subject to the Net Investment Income Tax (NIIT).  Apparently when the NIIT was taught by NATP last year it was stated that this could not be done.

· PARTNERSHIPS: SELF-EMPLOYMENT TAX AND GUARANTEED PAYMENTS

A partner, whether general or limited, can NEVER also be an employee of a partnership entity.  A partner should NEVER receive both a K-1 AND a W-2 from the same partnership entity.  A partner NEVER receives a salary; he/she may receive a “guaranteed payment” from the partnership, regardless of the amount of profit or loss, in exchange for services provided to the partnership, which is a deductible item for the partnership (and reduces net taxable income or increases the net deductible loss passed through to partners) and reported on the Form K-1 of the partner receiving the payment.

In the past I have on at least two occasions had a client give me a K-1 and a W-2 from the same partnership entity.  On these rare occasions the Form 1065, and Form K-1, for the partnership and the W-2 were prepared by a CPA firm.

Included in the guaranteed payment to a partner reported on Form K-1 can be health insurance premiums paid by the partnership for the partner’s individual or family coverage.  This is included in the income of the partner reported on Schedule E Page 2, and is deducted out as a “self-employed health insurance deduction” adjustment to income on the bottom portion of Page 1 of Form 1040.  So for income tax purposes it is a wash.  However, because the insurance premium payment is included in “guaranteed payments” it is subject to self-employment tax.

This is different to the treatment of health insurance premiums paid for a more than   % owner of a sub-S corporation who is also an employee.  The premium payments are included in Box 1 or Form W-2 and deducted as an adjustment to income.  However these payments are NOT subject to FICA tax and are not included in wages reported in Box 3 or Box 5 on the W-2.

· HELPING DELINQUENT TAXPAYERS

If you owe a substantial amount of back taxes to the IRS or state tax authorities NEVER contact an agency that advertises on television, whether or not the ad actually says they can get you “off the hook” for “pennies on the dollar”.  Contact an independent tax professional.  If they do not personally deal with collection issues they can refer you to a legitimate source that does.  To be honest, this is my personal advice and not that of the seminar leader.

· NET INVESTMENT INCOME TAX (NIIT)

The session attempted to make the attendees “NIIT wits”.

This component of ACA began with 2013 returns, and had impacted a few of my clients.  Luckily the investment income of these clients was limited to interest, dividends, and investment-related capital gains so the income subject to the tax was easily identified. 

The NIIT is a “surtax” because it is a tax on income that has already been taxed.  It is a tax that is in addition to the regular income tax and the dreaded Alternative Minimum Tax (AMT).  It has no impact whatsoever in the calculation of the dreaded AMT.

The actual legislation creating the NIIT was only 2 pages long, but those 2 pages have generated about 270 pages of IRS regulations so far, most of which was first published on 12/13/13.  Because of the “newness” of the tax there is much of its application that has not yet been decided by the IRS and areas of it are subject to interpretation.

The NIIT income thresholds at which the surtax kicks in - $200,000 if “unmarried”, $250,000 if married filing jointly, and $125,000 if married filing separately - are fixed and are not indexed for inflation.  So it will affect more and more taxpayers each successive year as incomes grow.

Any questions?

TTFN

Tuesday, September 16, 2014

THE NATP TAX FORUM IN ATLANTIC CITY


Last week I attended the National Association of Tax Professionals Tax Forum in Atlantic City.

The NATP Tax Forums are formatted the exact same way as the IRS Nationwide Forums (except that the IRS Forum is 3 days while this event was on 2), copying both what was good and what was bad.  My main complaints with the IRS Forums was the fact that the individual educational topics were limited to a single “50-minute hour” presentation (often not enough time to properly cover a topic and take questions from the “audience”), there were no tables set up in the “classrooms” (forcing us to take notes on our knees), and the overcrowding in the popular classes, and these complaints also applied to NATP’s offering. 

The locations of the two Forum offerings by NATP, Atlantic City and Las Vegas (Sept 23 and 24), were chosen to take the place of the IRS Forums that had in past years been held in these cities, with New York City alternating with AC (the northeast location is now National Harbor, MD and the west coast location is San Diego).  The AC or NYC and Las Vegas IRS Forums were usually the best attended of the 5 offerings.

The one thing unique to the IRS Forums that NATP could not provide was hearing the IRS voice on various issues.  While the Forums included presentations from NATP, NAEA, NSA, NSTP, and other organization’s instructors, many were given by IRS personnel. 

Each day’s sessions in AC, 7 “50-minute hour” classes with a selection of 6 topics per “hour” (each topic was offered twice during the two days), began at 8AM and ended at just after 6 PM, with 11AM - 2PM off for lunch and strolling on the Boardwalk and through the vendor booths in the “Expo” area.  Of course the list of session topics included the obligatory 2 hours (100 minutes) of repetitive ethics preaching.  I passed on the first class of each day, allowing for an extra hour of sleep, and the last class of the first day and the last two of the second day, and, of course, the ethics preaching, attending a total of 9 sessions and earning 9 CPE.

I am always hearing about “blue-haired ladies”.  There actually was one (a very bright blue) at a session I attended on Thursday.

I was not given an all-inclusive workbook at check-in (at the Annual Conference we get a loose-leaf binder of all of the session workbooks at check-in, and at the IRS Forums, at least in the past, we received a workbook containing sections for all of the educational offerings).  I discovered at the first session that we had to download and print it ourselves.  Apparently an email had been sent to registrants a while ago explaining this.  I seem to recall getting some kind of reminder email from NATP, but I guess I misunderstood or did not completely read it.  When I get back home to internet access I will download a copy to my word file.

In my opinion, having to print-out a workbook of such size “in-house” takes up too much of my time and is too expensive in terms of wasted paper and ink.  I would prefer to pay $5.00 or so more in the registration fee to have NATP print the workbook in bulk and hand it out upon check-in.     

As usual, the NATP instructors were excellent and well informed on their individual topics of presentation.  Only one was new to me.

Since I will be attending the NATP National Conference in New Orleans next summer, and will be in Atlantic City as usual at year end for the NATP Tax Symposium, I will not be registering for the NATP Tax Forum if it is offered again next year.  And, judging by this year’s attendance, I expect it will be.

Tomorrow I will continue with items of interest from the educational sessions I attended.

TTFN

Monday, September 15, 2014

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’ - SPECIAL MONDAY EDITION


There was no free wi-fi in the guest rooms at Bally’s in Atlantic City ($12.99 for 24 hours) - so no internet access during the NATP Forum.  I had to wait until I could stop at a McDonald’s on the way home to check emails.  Hence no Friday BUZZ last week and this special, albeit abbreviated, Monday edition.  Posts on the NATP Tax Forum will appear tomorrow and Wednesday.

I get free in-room wi-fi at just about every motel (at every price level) I stay at – but not at a “higher class” casino hotel.  Go figure.                          

BTW – I returned home to northeast PA early Friday afternoon, and headed out again on Saturday morning to Wellesboro, PA (2 hours west on Route 6 outside of Scranton).  I will be heading back home tomorrow afternoon.  Back at my desk, and the few remaining GDEs, on Wednesday.

* Jason Dinesen adds his more than 2 cents to a discussion I began in “What Is Our Legal Responsibility” in the September issue of “The Tax Professional” in his blog post “What Responsibilities Do Tax Preparers Have in Assessing ACA Penalties?”.

I thank Jason for his contribution to the discussion, and look forward to hearing what other tax pros have to say.

* The CCH week-day daily Tax Headlines email newsletter tells us “Senate Faces Abbreviated Schedule for Remainder of Session” -

Congress returned to work on September 8 with inversion transactions, the extension of expired tax incentives, retirement security and internet access taxes all awaiting action, but little time to accomplish everything prior to the November 4 midterm elections. Congress may be in session for as little as two weeks before recessing for election campaigns, returning in early December for a very short lame-duck session.”

These idiots have done virtually nothing for the first 8 months of the year.  Do you really think they will accomplish anything in two weeks?

I expect that the “tax extenders” will once again be extended in December – once again causing delays to the start of processing 2014 tax return.

* Kay Bell, the yellow rose of taxes, suggests “IRS Direct Pay One of Many Ways to Pay Estimated Taxes”, which are due today.

* CPA James Lange warns us to “Beware of the Pro Rata Rule for Roth Conversions” at his ROTH REVOLUTION BLOG.

This is something that higher-income taxpayers do not take into consideration when attempting a “back-door” ROTH contribution.  They make a non-deductible traditional IRA contribution of $5,500 and turn around and convert this $5,500 contribution to a ROTH and assume that there will be no income tax on the conversion.  But, as Mr Gershwin wrote, “it ain’t necessarily so”!  In a not uncommon example provided by James in the post $4,750 of the conversion is taxed!

THE FINAL WORD:

Is it mere coincidence that a highly touted broadcast tv series of the new fall season, with a primo time slot, is about a female Secretary of State – just 2 years before the next Presidential election?

TTFN

Sunday, September 14, 2014

GETTING BACK TO THE GARDEN: CROSBY, STILLS & NASH RETURN TO WOODSTOCK

Here is another post that has nothing to do with taxes that I originally wrote for another publication, but apparently was not accepted.

I finally got myself back to the garden – to the Bethel Woods Center for the Arts, located on the site of the iconic 1969 Woodstock Music and Arts Fair, that is.

I have been living in northeast Pennsylvania for two years now, and had visited the area just about every summer for decades before the move, but had not yet been to the Bethel Woods Center, about 30or so miles from my new home in Hawley located just off Route 17B between Fosterdale and Monticello NY, whose 15,000 seat outdoor amphitheater opened in 2006 and museum opened in 2008.

The Museum at Bethel Woods is an immersive and captivating multi-media experience that combines film and interactive displays, text panels and artifacts to tell the story of Woodstock and the Sixties.  It is open April thru December, including most holidays.  From May 1 to September 1 the hours are 10 AM to 7 PM, 7 days a week.   From September 2 – October 13 the hours are 10 AM to 5 PM, also 7 days a week.   

I chose as my introduction to the Center the (David) Crosby, (Stephen) Stills, and (Graham) Nash concert held on Saturday evening, July 5th – specifically because CSN, and Y (for Neil Young), had appeared at Woodstock almost 45 years earlier at the beginning of their collaboration. 

I was in the area, spending summer vacation at “Dellwood Acres” in Beach Lake, during the original festival – but was only 15 and too young to attend.  I do remember seeing overhead shots of the crowds in the Sunday News.

My family had driven to Lake Huntington NY, less than ten miles from Yasgur’s farm, where my mother grew up, and we stopped at a local general store.  The proprietor told my father he had nothing to sell him because the “hippies” had bought everything in the store.

I saw Crosby, Stills and Nash in concert twice before in the 1970s.  The first time was at Roosevelt Stadium in Jersey City, NJ on the night Richard Nixon resigned as President.  One of the three announced to the audience that he had just been told of Nixon’s resignation and the band immediately went into “Ohio” (“Tin soldiers and Nixon coming”).

The second time was in the gymnasium at Georgetown University.  I was visiting a friend from high school who was attending the University.  The tickets were for Crosby and Nash, but after a few numbers surprise guest Stephen Stills joined David and Graham onstage for the rest of the concert.

A word of advice to anyone planning to attend a concert at Bethel Woods – pay the additional $25.00 for premium parking!

I had joined the Bethel Woods Center as a member, and assumed that I could park in the Members Parking Lot.  However when I arrived that evening I discovered that this lot was only for those of higher-level memberships, so I had to park in the grass in one of the free lots located behind the premium, and paved, lots.  While there was staff on hand to guide the free parkers on the way in, there were none on the way out. I was glad to have been able to find my car easily when it was over, but it was an hour before I finally got back on Route 17B.

It was a long walk from the parking lot to the Pavilion, especially for someone of my girth, but the route was well marked and there were frequent rest stops, souvenir shops, and expensive concession stands along the way.  While there were “traditional” rest rooms, I also noticed a bank of “Port-O-Sans” along the way – a hat tip to the 1969 festival.

As I queued up for the Mens’ Room during the 20-minute intermission I noticed staff members “guarding” the surrounding grounds to make sure nobody decided to avoid the long lines and seek relief among the trees.

The guys opened with “Carry On/Questions”, ended the first Act with “Déjà Vu”, and their encore was “Teach Your Children”.  They also gave us during the course of the 2½ hour concert “Marrakesh Express”, “Our House”, “Just a Song Before I Go”, “Southern Cross”, “For What It’s Worth” (“There's a man with a gun over there”), and “Love the One You’re With.

If I am 60 they are at least in their late 60s – and have aged well.  Time has not diminished their musical skills – with Stephen Stills still nimble on the electric guitar.  Although their harmonies were not quite as melodious, they did hold up well.

The politics of the group has not changed.  Stephen Stills reminded the audience that this is an election year and emphasized the importance of getting out there to vote so that we can "empty the clown car".  And Graham Nash dedicated “Military Madness” to Bush, Cheney, Rumsfeld, Wolfowitz, and all of the other prominent players in the Iraq War.

Conspicuously, and surprisingly, missing from the evening’s set list was “Wooden Ships”, which they performed at the original Festival and was featured in the documentary movie, “Suite: Judy Blue Eyes” (also song at Woodstock), “Ohio”, and, most surprising of all, despite frequent calls for it from the audience, “Woodstock”.  I had expected them to either open with this classic number or use it as their encore.  

Each member had a “solo” segment in the second Act, which featured some new, at least to me, material.  There were also a few new numbers performed as a group.  While the new numbers were good, I personally would have preferred more of their “oldies”.

I was also surprised that the group did not discuss, or even acknowledge, their previous appearance at this location 45 years ago.  The only reference to the original Woodstock festival came from Graham Nash, who early on suggested, "If we try very hard, maybe we can stop this rain!!"

While I left somewhat disappointed at the omissions and angered at the “exit strategy”, I can honestly say that I enjoyed the show, and was glad that I finally made it “back to the garden”.

TTFN

Tuesday, September 9, 2014

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’ - TUESDAY EDITION


I am off to the Boardwalk in Atlantic City for the National Association of Tax Professionals’ TAX FORUM.  Depending on the availability of sufficient free time, and if I get free internet access at my hotel room, I may post on items of interest learned or reminded of at the Forum during the week, and provide a Friday BUZZ.  If I encounter a problem, I will post on the Forum when I return.

* Tax pros – please check out the September “issue” of my free online newsletter “The Tax Professional” – and spread the word to your colleagues.

* Kelly Phillips Erb reports that “IRS Hit With Class Action Suit Over Tax Preparer User Fees” at FORBES.COM.
 
The suit, Adam Steele, Brittany Montrois et al versus United States of America, challenges the Internal Revenue Service ability to charge an excessive “user fee” to tax preparers each year to renew their required PTIN (Preparer Taxpayer Identification Number).

I brought up this issue last November in my editorial “Why Is There Still an Excessive PTIN Fee?” at TAXPRO TODAY.

In my editorial I suggested that -
 
Once the mandatory RTRP regulation regime has been finally declared truly dead, the tax preparer membership organizations should actively lobby the IRS to reduce, or eliminate, the initial and annual PTIN fees.”
 
Well the RTRP scheme has been officially dead for some time now – and this is the first I have heard of any attempt to address the excessive PTIN fee.


 
* Here is something I came across reading a local paper while having Sunday breakfast at the Milford Diner.

Professional stager Claudia Jacobs deals with the question “Are Home-Staging Costs Tax Deductible –Part I” in her Claudia’s Corner column at the TIMES HERALD RECORD.

Of course, as with any other tax question, the answer is “it depends”.

* In a truly rare occasion I agree with a state CPA representative and disagree with Prof Jim Maule.

In his post “Placing Blame for the Tax Mess” Jim quotes a letter to the editor of the Philadelphia Inquirer, titled “Rewrite, Don't Blame”, by Michael Colgan, chief executive officer of the Pennsylvania Institute of CPAs.

The letter says that President Obama “missed the mark” by placing “blame for corporate inversions on ‘accountants going to some big corporations . . . and saying we found a great loophole.’’ Colgan also stated, “The real blame lies at the feet of the president and Congress for not tackling the long-overdue rewrite of the U.S. tax code.”

I agree with these statements from Mr Colgan.

Jim says –

Though Colgan is correct that inversions are not illegal, including the president, or any president, among those deserving of blame for the mess that is the Internal Revenue Code totally misses the mark.”

The Prof is correct that “the Internal Revenue Code is a product of the {idiots in} Congress”.  But Colgan is not blaming BO for the complexity of the Tax Code, but for “not tackling the long-overdue rewrite of the U.S. tax code”.  This is true.  The 1986 tax reform only happened because of the leadership of then President Ronald Reagan.  BO has shown no interest in rewriting the mucking fess that is our Tax Code.  The President’s various proposals for “tax reform” only add complexity to the already ultra-complex Code.
 
A popular phrase from my younger days stated - "If you are not part of the solution you are part of the problem".

Jim, Mr Colgan, and I do all agree that –

“. . . the Internal Revenue Code needs to be fixed and that doing so is a ‘monumental, yet critical, initiative’.”  

* Jean Murray, provides a primer onCapital Contribution” at ABOUT.COM.  

* I realize this item is a bit late, but FYI Kay Bell brought us the news, and it was not good, about “Gun Sales Tax Holidays Sept. 5-7 in Louisiana and Mississippi”.

I can understand sales tax holidays for back to school shopping, but sales tax holidays for gun purchases is totally ridiculous!  We should NOT be encouraging the sale of guns – just the opposite!

At least the sales tax forgiveness is for hunting guns and equipment only.  So if the idiot father of the 9-year old who in a tragic accident killed her instructor with an uzi decided to travel to Louisiana to buy his daughter her own gun he would still have to pay sales tax.

Speaking of the father of that 9-year old – has he been arrested for child endangerment yet?  Why not? 

This story has apparently died out.  I am truly surprised that more people, especially parents, were not “up in arms” (pardon the pun) about the fact that a 9-year old could legally learn how to use an uzi, or that a sane and responsible parent would allow such a thing.

TTFN